EDF, IFC and the Republic of Cameroon have signed final and binding agreements for the construction of the 420MW Nachtigal hydroelectric project in Cameroon.
The work will involve the design and construction of the project on the Sanaga river near the Nachtigal Falls, as well as the operation of the facility for 35 years. It also includes the construction of a 50km power transmission line. The project will be owned and operated by NHPC (Nachtigal Hydro Power Company), currently owned by EDF (40%), IFC (30%) and the Republic of Cameroon (30%).
The signing on 8 November marks the conclusion of all key agreements and contracts relating to the construction, operation, and financing of the infrastructure.
The project’s expected total cost is €1.2 billion. Shareholders’ equity will fund a quarter of the project cost while the rest will be funded by lenders. The lender group coordinated by IFC includes 11 development finance institutions and four local commercial banks. IFC was involved as a partner at an early stage to help develop the project through IFC InfraVentures and is the global coordinator of the financing package. Nachtigal will be the largest hydropower project ever built in Africa through project finance, a funding scheme that has already proven effective in the renewables sector, and the largest hydropower project supported by the World Bank Group in Africa.
The lending syndicate is comprised of (in alphabetical order): African Development Bank, Africa Finance Corporation, Agence Francaise de Developpement, Attijariwafa SCB Cameroon, BICEC, CDC Group, DEG, PIDG company - the Emerging Africa Infrastructure, European Investment Bank, FMO, International Finance Corporation, OFID, Proparco, Société Générale Cameroun, Standard Chartered Bank Cameroon.
A cornerstone of Cameroon’s electricity sector development plan, Nachtigal is a national priority which will enhance the reliability of the country’s power system. Its expected power generation will cover 30% of the country’s electricity demand, amounting to an annual output of nearly 3TWh. The power generated by the project will be sold to the grid operator via a Power Purchase Agreement at a competitive tariff. The project will generate substantial economic benefits: up to 1,500 direct jobs during peak construction periods, of which 65% will be locally sourced within a 65-km radius of the construction site.
Construction will begin by the end of 2018, when the financial closing is completed. The dam is due to be commissioned in 2023.